Charles Taylor has launched a new asset protection programme for Latin American small and medium-sized enterprises (SMEs), designed to protect them from the costs of catastrophe insurance deductibles.
According to Charles Taylor, most catastrophe policies include deductibles of around 2 percent, meaning policyholders can face shortfalls in the event of a claim.
The new Catastrophe Insurance & Asset Protection Program uses a Bermuda-based captive insurance segregated cell company to provide insurance to cover these shortfalls. This means it can pay SMEs’ deductibles with an immediate insurance payment.
Policyholders will own a captive cell, meaning all premiums built up in the insurance company will belong to the policyholder, minus fees and operating expenses.
If the policyholder makes an insurance claim, the insurance deductible will be paid by the reinsurance, or a combination of the reinsurance and accumulated premiums. If no claims are made, the policyholder will be able to use the premiums to re-invest in its business.
Alvaro Ortiz, president and chief executive of Charles Taylor in Panama, said: “A major earthquake or other natural disaster could leave SME businesses in Latin America struggling with depleted cash flows after covering full catastrophic deductibles. Our new programme is designed to replace that cash flow and enable these SME clients to continue their profitable operations.”
The captives will be held in US dollars, and therefore will be protected from potential currency fluctuation and controls.
Oritz said: “Policyholders can protect their businesses from an insurance payment shortfall, at the same time building up US Dollar reserves, protecting them from potential currency devaluation in their own country. They can also retain control of their US Dollar assets built up in their captive cell to reinvest back into their business.”
The launch of the Catastrophe Insurance & Asset Protection Program comes after Charles Taylor announced the opening of a new office in Panama, expanding its offering of captive insurance services to businesses in Latin America, and bringing its presence in the region to six offices.
